Compensation And Retirement Planning

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Questions Bank

Taxes and Taxing Jurisdictions
Policy Standards for a Good Tax
Taxes as Transaction Costs
Maxims of Income Tax Planning
Tax Research
Taxable Income from Business Operations
Property Acquisitions and Cost Recovery Deductions
Property Dispositions
Nontaxable Exchanges
Sole Proprietorships
The Corporate Taxpayer
The Choice of Business Entity
Jurisdictional Issues in Business Taxation
The Individual Tax Formula
Compensation and Retirement Planning
Investment and Personal Financial Planning
Tax Consequences of Personal Activities
The Tax Compliance Process

All Questions

Question 1

Free

True/False

The classification of a worker as an employee or an independent contractor determines how much payroll tax a company must pay.

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Question 2

Free

True/False

Employers must withhold state and federal income tax from compensation paid to independent contractors.

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True

False

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Question 3

Free

True/False

An independent contractor is not entitled to the same fringe benefits as an employee.

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Question 4

Free

True/False

Self-employed individuals have fewer opportunities than employees to underpay income and payroll taxes.

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Question 5

Free

True/False

The IRS is less likely to raise the issue of reasonable compensation during the audit of a publicly held corporation than a closely held corporation.

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Question 6

True/False

In 2018, Dargo Inc., a calendar year corporation, accrued a $75,000 year-end bonus payable to its communications director. Dargo and the director are not related parties. Dargo paid the bonus to the director on February 8, 2019. Dargo can deduct the bonus in 2018.

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Question 7

True/False

In 2018, Largo Inc., a calendar year corporation, accrued a $45,000 year-end bonus payable to its communications director. Largo and the director are not related parties. Largo paid the bonus to the director on April 3, 2019. Dargo can deduct the bonus in 2018.

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True

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Question 8

True/False

An S corporation generated $160,000 ordinary taxable income this year. The shareholders must pay both income and self-employment tax on their pro rata shares of this income.

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True

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Question 9

True/False

A shareholder-employee of an S corporation prefers to receive a greater salary rather than a greater pro-rata share of corporate taxable income.

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Question 10

True/False

Wages paid by an employer to an employee who is the employer's child under age 18 are not subject to federal FICA and unemployment taxes.

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True

False

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Question 11

True/False

Employees don't include the value of any compensatory fringe benefits in gross income because the benefit doesn't consist of a direct cash payment.

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Question 12

True/False

The value of employer-provided health insurance is excluded from the employee's gross income.

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Question 13

True/False

An employee recognizes taxable income if his employer provides group-term life insurance coverage in excess of $50,000.

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Question 14

True/False

Olan Inc. provides an on-site day care center free of charge to employees who have pre-school children. Employees who enroll their children may exclude the value of this fringe benefit from gross income.

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True

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Question 15

True/False

The value of a nontaxable fringe benefit is different for each employee because employees have different financial needs and consumption preferences.

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Question 16

True/False

Self-employed individuals are allowed to deduct the cost of health insurance for themselves and their families only as an itemized deduction.

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True

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Question 17

True/False

A cafeteria plan allows employees to select between a variety of nontaxable fringe benefits or taxable cash compensation.

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Question 18

True/False

An employee who receives restricted stock as compensation from a corporate employer must include the stock's fair market value in gross income in the year of receipt, even though the employee's ownership rights in the stock are nonvested.

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Question 19

True/False

A corporation that transfers restricted stock to an employee as compensation may deduct the stock's fair market value in the year of transfer even if the employee doesn't recognize the value as gross income in the year of transfer.

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Question 20

True/False

Stock options are a form of compensation that requires a substantial cash outlay by the corporate employer.

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